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Refreshing Insights

When business owners and executives try to improve employee productivity, most look at processes, new equipment, software upgrades and other traditional solutions. Few consider the financial wellbeing of their employees a factor in the day-to-day operations of their companies. But they should.

Among employees who feel stressed about finances, half spend three or more hours per week thinking about or dealing with financial concerns while at work, and 20% spend five or more hours stressing about finances.1 You can get that time back by helping your employees get a handle on their finances and establishing a financial wellness program as part of your 401(k) benefits package.

What is a Financial Wellness Program?

 If you do an online search to explain what a financial wellness program is, you’ll get a lot of answers. There isn’t much consensus among advisors, financial experts or the average consumer. For me, it’s not so much what it is as what it should accomplish.

The main purpose of a financial wellness program should be focused on providing freedom from financial stress and educating people about how to deal with their financial challenges. For some, it could be focused on dealing with consequences of poor financial decisions of the past and overcoming seemingly insurmountable debt from credit cards, student loans, a home mortgage or car payments. For others, it may focus on how to manage finances better by saving toward an emergency fund, future endeavor or retirement.

There is no one-size-fits-all program for everyone because each person’s situation and financial goals can be vastly different. No matter the circumstance, however, the ultimate goal of a financial wellness program is to help your employees enjoy life and have financial confidence.

As an employer, there are a few different approaches you can take. 

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1. One-on-One Personal Guidance 

Some people prefer to talk on a personal level about their unique situations and want a hands-off approach where they don’t have to navigate through computer prompts or sift through all the options on their own. With one-on-one personal guidance, a 401(k) administrator offers high-level financial insights and makes general recommendations.

This type of guidance can explore issues that may have led to financial difficulties. An advantage of personal guidance is the knowledge that is brought to the table in regards to resources, such as locally available non-profit consumer credit counseling agencies that help individuals apply sound financial principles. One such example in Northeastern Wisconsin is FISC.

Financial wellness programs that only rely on online materials provided through a 401(k) provider simply aren’t equipped to recommend localized resources. Yet, not everyone is comfortable talking about their finances face-to-face — perhaps they’re embarrassed, wary or simply have a hard time admitting their financial woes. For these individuals, a do-it-yourself approach is more appealing. 

2. 401(k) Provider Online Tools

Most 401(k) providers offer simple, free online resources that allow individual investors to explore on their own time and terms. You can search keywords such as credit card debt, student loans, paying off a mortgage and other topics, and the program will recommend relevant articles, videos and other educational materials. While some investment companies are just rolling out their versions of financial wellness programs, others have been offering them for some time and are getting better and better at providing resources for their investors.

 Many of these programs are still limited in the scope of assistance they provide their investors, especially when it comes to individualized support. But with technology becoming more intuitive and the promise of artificial intelligence, we should expect these programs to improve over time.

3. Financial Wellness Firm

The most stepped-up version, and potentially the most effective, involves hiring a professional firm to implement your financial wellness program which includes a more customized web-based educational platform. This type of service typically has a per-participant fee at the company level. While it will cost your company some money, it provides measurable metrics to assess its effectiveness.

Expanded offerings may include budgeting software, access to coaching, community forums, behavioral assessments, interest-free student loan repayment plans and more. Some programs even take a gamification approach to keep users engaged and make managing their finances fun. Over time, participants can see how much more they’re saving per month, how much they’ve reduced debt and other results of the actions being taken. These insights can be a major motivating factor for many investors.

 As an employer, you can see collectively whether people are participating and if it’s making a difference. Because of privacy laws, you won’t be able to see individual statistics, but you’ll be able to gather overall results of how much is being put into savings, how much money is being shifted toward the 401(k) plan and other insights.

Decisions, Decisions

Research shows that 84% of employees want or need financial wellness programs, yet only 18% of employers currently offer them. Offering such programs can distinguish your company as an employer of choice, but which approach is best for you and your employees?

There is no cut-and-dried answer. Often times, we recommend a hybrid approach where an employer leverages the tools offered by a 401(k) provider and supplements it with personal guidance from an advisor. For others, we advocate the use of a third-party financial wellness firm. It all depends on your circumstances. 

Whatever you decide, don’t go it alone. Be sure you work with a benefits administrator you trust who can strategize with you, assess the needs of your employees and make recommendations. At McClone, we take a personalized approach to helping businesses offer the best possible benefits packages for their employees that work within their means. If you’d like to learn more, request a meeting where we can sit down and talk through your unique challenges.401k Success Story

This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations. 


1. Employee Financial Wellness Survey, April 2017

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